Council directs staff to pursue percentage-based service fee to recover city card-processing costs

Matt Hamilton, Denton's chief financial officer, told the council staff is reviewing three ways to recover online card-processing costs: keep absorbing costs in utility budgets; assess a flat convenience fee (estimated $2.90 per transaction); or apply a service fee now allowed under October 2025 card-brand rule changes that can be percentage‑based (Hamilton said an estimate to fully recover costs would be about 1.55 percent on all card payments, or 2.6 percent if applied only to commercial accounts). Hamilton said roughly 95 percent of the city's processing costs are set by card brands (interchange and network assessments) and are nonnegotiable, and that the customer-service utility function accounted for about $1,570,000 in card-processing expense in 2025, up from $1,310,000 in 2024.

Council members asked whether customers would have fee-free alternatives; Hamilton and Krista Foster, customer service manager, said customers could use eChecks, bank drafts, in-person payments or mailed checks to avoid card fees. Several council members — including the members who identified themselves as preferring commercial-only treatment — expressed support for option 3, with many endorsing a percentage-based service fee as fairer than a flat fee. Foster warned a flat fee would disproportionately affect prepaid or vulnerable customers who may make multiple small payments per month. Council gave staff direction to proceed with design and customer messaging for implementation (Hamilton estimated roughly six months to implement and suggested aiming for the new fiscal year on Oct. 1).